Who killed Credit Suisse?
At some point in the not too distant future, Credit Suisse as we currently know it will cease to exist. In the coming restructuring, the capital markets and investment banking division will spin off under Michael Klein, a veteran US banker with unusually strong ties to Saudi Arabia. The securitized products group is going to Apollo Global Management, which said this week that it's "incredibly enthusiastic" about the purchase and that it thinks the asset backed origination could be as big corporate credit. The remaining units are being slimmed down or streamlined out of existence as Credit Suisse redefines itself as a wealth management firm with a foundation firm like a Swiss mountain.
As the bank reconfigures, some of its employees are looking for people to blame. The hit list is long, and the individual culpability not always clear. But here are some of the names that get mentioned in the dark times.
1. Brady Dougan
It started with Brady, says one Credit Suisse credit veteran. Dougan was CEO of Credit Suisse from 2007 and 2015. He was a good, fun, guy, but some say he started the rot.
"Dougan had the opportunity to bring in capital after ’08. What he and his cronies did was create a security - I believe it was called Partner Asset Facility for something-that was awarded to an exclusive group within the IB," he says. "A fairly large group took out an incredible amount of money. Gobs of money. Everything else was secondary to the stock price. So while CS came out very strong from the crisis, he didn’t build on that for the long term. With the markets' wind at their back, that lack of capital was not front and center as the Fed kept rates low and the risk trade was fully on."
"Credit Suisse was full of meritocracy until Brady Dougan came along," says another former MD.
2. Brian Chin
Brian Chin ran the securitized products group at Credit Suisse and was head of the markets division at Credit Suisse's investment bank and then head of the investment bank as a whole until he was let go in April 2021.
One Credit Suisse insider says Chin was the wrong guy for the job. Mike Marriott was the former head of the securitized products group at Credit Suisse, but he left in 2009 to open his own firm with former boss Jim Healy. Everyone loved Mike, says one insider. Those same people did not, apparently, love Chin who was a far more political creature. In 2012, Chin hired Jay Kim who's the current global head of Credit Suisse's fixed income credit products business. Neither man inspired the same sort of loyalty as Marriott, say some insiders. On the other hand, everyone loved Mike Dryden, but he left in April this year.
3. John Dabbs and Ryan Nelson
Dabbs and Nelson ran the prime broking business before the Archegos blow-up that initiated all this. Neither man was mentioned in the independently written report that said Credit Suisse senior people had been incompetent, but they were - coincidentally - at the heart of the business with all the issues.
"The prime services business was mismanaged. This was due in part to a lack of competence (including a failure to appreciate obvious and severe risks) as well as a culture in which profits were prioritized over sound risk management and respect for controls," said the report.
4. Incompetent overpaid MDs in middle management
Multiple sources say Credit Suisse was destroyed by overpaid mid-ranking men in suits. "It was the MDs in middle management, not the producers," says one. "They were promoted through politics and it set a bad example and twisted the culture from being a meritocracy to one where politics was what mattered."
The change began with Brady Dougan, but it was seemingly solidified during the era of Tidjane Thiam, who may also therefore share a portion of blame. Some Credit Suisse traders have also been heard to blame Christian Meissner for failing to stand up for the markets division, but other insiders say this is unfair: Meissner was only drafted in after Archegos and by that time it was far too late.
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